Contracts - Defective Formulation

Front 1

Raffles v. Wichelhaus (Peerless)

holding?

Back 1

Parties to sale of cotton on ship "Peerless" each expressed assent to a different thing b/c of a latent ambiguity because 2 ships were called "Peerless".

If no consensus ad idem ("meeting of the minds") on a material term., then no binding contract.

Front 2

RS2nd § 20 (a) “The Clueless Rule”

No mutual assent if:

Back 2

(i) If parties attach materially different meanings to their manifestations
(ii) AND
1. neither party knows or has reason to know the meaning of the other
2. OR each knows or each party has reason to know the meaning attached by the other

Front 3

RS2nd § 20 (b) “The Clueless Rule”

Meaning of 1 party operative if:

Back 3

)1 doesn't & the other does(

(i) 1st party doesn’t know the 2nd party attaches a 2nd meaning
(ii) AND
(iii) 2nd party DOES know of the 1st party’s meaning

Front 4

RS2nd § 20 (c) “The Clueless Rule”

Meaning of 1 party operative if:

Back 4

(1 has no reason, 2 has a reason)

(i) 1st party has no reason to know the 2nd party attaches a 2nd meaning
(ii) AND
(iii) 2nd party HAS a reason know of the 1st party’s meaning

Front 5

Konic International Corp. v. Spokane Computer Services, Inc

KONIC holds:

Rule on material difference of understanding?

Back 5

Held: rescission permitted when parties had equal fault in using an ambiguous oral formula of "fifty-six twenty".

Rule: Even though the parties manifest mutual assent to the same words of agreement, there may be no contract because of a material difference of understanding as to the terms of the exchange.

Front 6

Exam langauge for mistake of fact.

MA-M-R

Back 6

The contract is VOIDABLE by A because 1) both parties were MISTAKEN as to a basic ASSUMPTION on which the K was made,
2) the mistake was MATERIAL, and
3) the assumption was not one as to which A, the adversely affected party bore the RISK of mistake.